The CEO of Barratt Developments (BDEV.L), Britain’s largest house builder by sales, enjoyed a 30% pay rise last year thanks to record profits at the business.
Barratt’s annual report shows that David Thomas, who has been in charge since 2015, saw his total take home rise from £2.7m in 2018 to £3.6m in the 12 month to 30 June 2019.
The rise was down to a big jump in Thomas’ bonus award under Barratt’s long-term performance plan (LTPP), which pays out based on long-term share price performance, earnings per share, and returns on capital employed. Thomas’ LTPP payout almost doubled last year to £1.6m-worth of shares. Thomas was awarded 92% of the possible maximum payout of the LTPP scheme, which was set up in 2016.
The big payout came as Barratt “met, or in some cases exceeded, the financial and non-financial short and long term performance targets” set by the board, Richard Akers, chairman of the remuneration committee, wrote in the company’s annual report.
“This would not have been possible without the clear direction and leadership from the Executive Directors and Senior Management.”
Earlier this month Barratt Developments reported a record annual profit of £910m, with sales rising by 1.5%.
Housebuilders across the UK have been boosted by the government’s Help to Buy policy, which gives first time buyers interest free loans for part of the cost of a new build. Launched in 2013, the scheme has helped support the market for new builds in the UK and spurred house builders to record performance.
Help to Buy sales accounted for 36% of Barratt Development’s sales last year and Barratt has been the second biggest user of the scheme since its introduction, according to Deutsche Bank. The developer has built 13.3% of all homes purchased through Help to Buy.
The company said in its annual report that the market for new builds remained “strong” and the “government’s support for Help to Buy underpins this demand.”
Help to Buy was set to run until 2021 but was extended by former chancellor Philip Hammond until 2023. Deutsche Bank recently began equity coverage of the house building sector, saying the outlook was positive due to “another powerful wave of government support.”
Executive pay in the house building sector has been controversial given the government subsidies. Persimmon (PSN.L) axed CEO Jeff Fairburn in November last year after controversy surrounding his £75m pay package, which made him the UK’s highest paid chief executive.
Thomas’ pay in the Help to Buy-era peaked at £7.5m in 2015. This year’s award represents the highest pay package for Barratt’s CEO since that bumper 2015 payout.